Are UK High Streets in trouble?
2018 was an incredibly bad year for the UK’s high street retail sector, and the early months of 2019 seem to be showing similar indications for some brands. Keeping up with consumer drift to online shopping has taken its toll on a variety of top retail brands, including Fenwicks, Mothercare, New Look and Toys R Us. There are high street businesses that are performing well, though, and one important tip for all business leaders is to ensure accurate accounting and analysis is carried out. Keeping up to speed with all the key performance indicators (KPIs) impacting your high street hospitality or retail outlet can be the difference between success or failure in the contemporary high street.
Government report into the Future of the High Street
The government has been looking into the ways people shop and how high streets are used, and the Future High Street Fund is one of the initiatives announced in the 2018 Budget. Virgate Accounts has a sincere commitment to supporting business in the retail and hospitality sector, and many of our valuable clients are based on high streets in and around our Gloucester HQ. We are always looking for ways our clients can maximise profitability and growth, while ensuring they offer the same high levels of customer service, excellent products and service, and ongoing employee benefits.
On 21 February 2019, the government’s Housing, Communities and Local Government Select Committee announced the results of its inquiry into the future for UK High Streets and city/town centres. This inquiry took place over the preceding six months. You can read the full copy of the report on the government’s website here or check out our summary below.
Likely future of UK high streets
One of the principal findings of the government report is that strong high streets of the future are likely to rely on a successful hospitality and leisure sector. It’s possible that the high street retail sector will continue to struggle against the strong competition offered by online brands. The analysis showed stronger high streets possess around 24% of food and leisure outlets and had around 9% of empty units in total. While weaker city centres averaged just 15% of food and leisure outlets tended to have about 16% of units vacant.
What constitutes a more successful high street?
More successful and stronger high streets also provide higher levels of office space, up to around 62%. While weaker town centres feature just 23% of offices in their make up
It’s felt one of the main reasons stronger high streets tend to feature more food and leisure outlets is because higher levels of footfall and customer spending power have enabled a natural adaptation to this type of new high street layout. In contrast, weak high streets don’t have the customer spending power and footfall to make the adaptations. This has resulted in higher levels of vacant retail units.
Reforms to business rates are considered crucial for the future success of town and city centres and the report makes a number of additional suggestions. These include:
– The introducing of an online sales tax which would be used to offset council business rates for high street outlets
– Business rates ‘holiday’ for any retailers whose improvements to property cause increases to their rates
– Reductions to business rates for high street outlets, which makes them more in line with out-of-town shopping malls
This report recognised just how critical town centres are for local consumers and put forward a variety of suggestions for building visitors and engagement over coming years. Consumers are moving away from their historic shopping focus towards a focus which relies more on experiences. Therefore, it is essential that UK high streets of the future focus upon the hospitality sector and leisure entertainments.
Keeping a close watch over the important operational KPIs of your retail or hospitality business is essential for maintaining growth and profitability. It can be tempting to rush headlong into business expansion when cash flow is at a peak, or to meander along hoping for the best, when sales or profits drop. The expert team at Virgate Accounts can provide all essential finance department services and all our clients benefit from our wide knowledge of UK high streets and trading obstacles.
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